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2015 (9) TMI 899 - AT - Income TaxReopening of assessment - assessee has not complied with the provisions of section 54B of the Act for claiming deduction - whether reasons to believe do not survive? - CIT(A) deleted the disallowance - Held that - When the assessee is showing income from business and profession in the return of income either negative or positive, then obviously, the assessee falls within the ambit of non-corporate tax payers which includes partners of the firm and hence, date of filing of return applicable for the assessee would be 31.10.06. We may further point out that when admittedly and undisputedly, the assessee deposited impugned amount of ₹ 32 lakh in the capital gains account scheme on 28.10.06 before the due date of filing of return i.e. 31.10.06, then assessee is eligible for deduction u/s 54B of the Act in this regard. We, therefore, are of the opinion that the view taken by the CIT(A) is sustainable and as per provisions of the Act and we are unable to see any infirmity, perversity or any other valid reason to interfere with the same. Accordingly, sole ground of the revenue being devoid of merits is dismissed. - Decided in favour of assessee. Declining the claim u/ s 54F - Held that - We are inclined to hold that the issue raised by the assessee is squarely covered in favour of the assessee by the judgment of Hon ble Madras High Court in the case of Dr. P.K. Vasnathi Rangarajan vs CIT (2012 (7) TMI 563 - MADRAS HIGH COURT) and the assessee cannot be denied exemption u/s 54F of the Act merely because he was the holder of 50% of the share jointly with Smt. Saroj Aggarwal of the property situated at Siddarth Extension Residential Scheme and the AO was not justified in denying claim of the assessee u/s 54 of the Act and the first appellate authority was incorrect in upholding the action of the AO on this issue. Finally in view of our foregoing discussion, we dismiss the action of the AO as well as impugned order pertaining to the claim of deduction u/s 54F of the Act and the AO is directed to allow the same to the assessee. - Decided in favour of assessee. Addition for income from house property - Held that - From careful reading of the impugned assessment order and order of the CIT(A), we are unable to see any fact or evidence which can substantiate that the assessee actually earned rental income from the said property during the previous year, even we are unable to see any name or entity to whom the said property was rented by the assessee. In this situation, addition made by the AO on the basis of surmises and conjectures cannot be held as sustainable and the view taken by the CIT(A) is mechanical and we decline to accept the same. Accordingly, addition made by the AO is directed to be deleted - Decided in favour of assessee.
Issues Involved:
1. Assumption and application of jurisdiction for reassessment proceedings under Section 147. 2. Claim of deduction under Section 54B. 3. Claim of deduction under Section 54F. 4. Addition of income from house property. Detailed Analysis: Issue 1: Assumption and Application of Jurisdiction for Reassessment Proceedings under Section 147 The Revenue challenged the reassessment proceedings under Section 147 on the grounds that the "reasons to believe" for initiating the proceedings did not survive concerning the addition of Rs. 32,00,000. The Tribunal examined the records and found that the assessee had deposited Rs. 32 lakh in the Capital Gains Accounts Scheme with Punjab National Bank on 28.10.06, which was before the extended due date of 31.10.06 as per the CBDT order dated 24.7.2006. The Tribunal upheld the CIT(A)'s decision, which allowed the assessee's claim for deduction under Section 54B, stating that the view taken by the CIT(A) was sustainable and as per the provisions of the Act. Consequently, the Revenue's appeal on this ground was dismissed. Issue 2: Claim of Deduction under Section 54B The assessee claimed a deduction under Section 54B, which was initially dismissed by the AO on the grounds that the due date for filing the return was 31.7.2006, not 31.10.06 as claimed by the assessee. The CIT(A) allowed the appeal, holding that the due date for furnishing the return was extended to 31.10.06 as per the CBDT order. The Tribunal confirmed this decision, noting that the assessee had deposited the amount in the Capital Gains Accounts Scheme before the extended due date, making the assessee eligible for the deduction under Section 54B. Issue 3: Claim of Deduction under Section 54F The assessee challenged the denial of a deduction of Rs. 23,80,000 under Section 54F. The AO and CIT(A) denied the claim, stating that the assessee owned more than one residential house on the date of the transfer of the original asset. However, the Tribunal found that the assessee owned only 50% of one of the properties in question, based on a Will, and referred to the judgment of the Hon'ble Madras High Court in Dr. P.K. Vasanthi Rangarajan vs CIT, which held that joint ownership does not preclude the claim for exemption under Section 54F. Thus, the Tribunal directed the AO to allow the deduction under Section 54F. Issue 4: Addition of Income from House Property The AO added Rs. 25,200 as income from house property, which the assessee contested, claiming no rent was received. The Tribunal found that the AO had not provided any evidence or established that the assessee actually earned rental income during the relevant financial period. The addition was based on surmises and conjectures without substantiating facts. Therefore, the Tribunal directed the deletion of the addition, allowing the assessee's ground. Conclusion: The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's appeal, directing the AO to allow the deductions under Sections 54B and 54F and to delete the addition of income from house property. The decision was pronounced in the open court on 9.9.2015.
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